Reserve Bank of New Zealand Retains Record Low 2.5% Official Cash Rate

March 13, 2013

Two years have passed since the second of two serious earthquakes on the South Island, which was followed almost immediately by a 50-basis point Official Cash Rate cut to 2.5%.  Monetary policymakers decided not to change their key interest rate for the 20th time in 21 meetings, and a released statement declared that “at this point we expect to keep the OCR unchanged through the end of the year.”  The statement identifies a balance between downside factors like the overvalued kiwi, worsening drought, current low inflation, weak labor market and fiscal restraint and upside factors like a housing market that’s heating up, Canterbury reconstruction that’s gaining momentum, lessening global economic and financial risks, and strengthening business and consumer confidence.  Real GDP is projected to expand 2-3%, and inflation is seen moving higher and toward the 2% midpoint of a 1-3% target range.  The third scheduled interest rate policy announcement of 2013 will be on May 8.

Copyright 2013, Larry Greenberg.  All rightst reserved.  No secondary distribution without express permission.



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